Piramal Pharma’s revival story on track, says group chairman Ajay Piramal

Some of these cost-optimisation measures, and changes to its product mix have begun to bear fruit: revenues rose 11% YoY to ₹1,911 crores in the second quarter of FY24, and core EBITDA margins expanded 430 basis points to 13.9%. It also repaid debt to the tune of ₹958 crore using the proceeds of a rights issue; this brought down its gross debt by around 20%.

While Piramal Pharma’s three key business verticals — CDMO, Complex Hospital Generics (CHG), and India Consumer Healthcare (ICH) — have all picked up traction, its CDMO business has been key in its revival story so far. And Piramal expects this to continue, despite the competitive nature of the business — thanks to India being seen as a viable alternative to China. "Earlier there was a lot of development and manufacturing happening in China. Now, because of the whole geo-political situation globally, a lot of it is moving also into India," said Piramal.

The China-plus-one factor is not the only reason though. Piramal added, "I think what is most important, first off, is to maintain a high-quality standard. So all our plants — whichever are serving the global customers — are US FDA approved. I am very happy to say that our team has worked hard to ensure that till now we have — and I touchwood — we have never had any significant issue with the FDA."

Piramal Pharma’s India Consumer Healthcare business, which is driven by key brands like Little’s (baby care), Lacto Calamine (skincare), I-Pill (emergency contraceptive), Polycrol (antacid), and Tetmosol (skincare), has also been a strong growth driver. The company is expanding its push on these products by enlarging its offline and online presence – including the launch of its own D2C (direct-to-customer) platform, Wellify.in. These measures have helped e-commerce sales account for 16% of total consumer healthcare revenues in FY22, and this number has been growing further in the last six months.

In addition, the company has launched 18 new products in the first six months of the financial year and has a few more in the pipeline.

Ajay Piramal also said that innovation and adapting to advances in technology will be crucial to the group’s growth — whether it’s in financial services, or in pharmaceuticals. This includes the adoption and use of Artificial Intelligence (AI). “I think AI and technology is now inherent in business and any part of life so we have to just embrace it and see more and more how we can use it… The limitation is in our thinking, it's not in the ability of AI. We have to just adapt to it. We are trying to do that within our organization but it is a constant; it is like you are on the treadmill. You have to keep moving ahead,” he says.

For Piramal Pharma, this kind of innovation is crucial. In FY23, 45% of the revenues in its CDMO business alone came from innovation-related work, which includes drug discovery, drug development, and the commercial manufacturing of products under patent. Its portfolio of products under patent doubled in that year to 18, from just nine in FY19. Its revenues from commercial products under patent also grew exponentially — from $19 million in FY19, to $52 million in FY23. AI-powered innovation, however, will not only be restricted to manufacturing and operations, but to functions like sales force optimisation & support.

The company is also charting out an aggressive expansion plan. This will involve organic growth through capex, especially in its CDMO business. However, the company admits it is always on the lookout for suitable opportunities that will lend themselves to inorganic growth, especially in its Consumer Health Business — acquisitions that will lead to enhanced capabilities through synergies and a broadening & deepening of its product portfolio.